psychology of trading

“” The Digital currency bitcoin jumped to a record high above $1,200 last Friday, as investors speculated the first bitcoin exchange-traded fund (ETF) to be issued in the United States is set to receive regulatory approval.

Traditional financial players have largely shunned the web-based “crytpocurrency,” viewing it as too volatile, complicated and risky, and doubting its inherent value.

But bitcoin, invented in 2008, performed better than any other currency in every year since 2010 apart from 2014, when it was the worst-performing currency, and has added almost a quarter to its value so far this year. “”

Bitcoin Now As Valuable As Gold

Another indication of just how stretched / ridiculous things have gotten when a digital crypto-currencies “perceived value” has matched / surpassed the price of gold.

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So it all comes down to Trump’s speech tonight….as market participant stand like fat deer in the headlights..

Gold still the same. EUR/USD up nicely but still more or less the same, and the beast of all beasts NUGT takes the world for a diving lesson. Boom…talk about a stop run. These things don’t happen unless the big boys are making their moves. They can push price a couple bucks in a couple of hours without batting an eye….all the while your piddly 200 shares with a .50 cent stop get’s gobbled up. Multiply that by a couple 100,000 ( or million ) and you start to better understand just how difficult it is to “trade” with a “pea shooter”…when those on the other side of your trade carry billion dollar bazookas.

Forex_Kong_Bazooka

You really don’t have much of a chance.

I find it incredibly ironic that the Trumpster is calling for some 54 billion more spending on Defence, and 1 Trillion on infrastructure when the country is already 100% flat busted / broke / bankrupt. As suggested by a few of the brightest minds in the comment section here at Kong – sounds like the ol debt ceiling with just get raised, then raised again…then again. Where does the money come from?

Sounds like more money printing to me..but I thought the economy is expanding and there is now talk of the rate hike cycle beginning? Not.

QE will happen in ‘Merica again.

The printing presses can never stop printing.

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I used to go on and on about it, but with The Fed printing confetti each and everyday for the past 8 years – it didn’t really matter. The United States is 100% totally broke / Greece style / Flat out busted.

You guys remember that thing called “the debt ceiling”? Well……March 15th – Here we go again…only this time it’s different.

March 15th is the day that the “debt ceiling holiday” that Obama and Boehner put together right before the last election in October of 2015 expires.

The debt ceiling will freeze in at $20 trillion. It will then be law. It will be a hard stop. The Treasury will have roughly $200 billion in cash. The U.S is burning cash at a $75 billion a month rate.

By summer, they will be out of cash. Totally out of cash.

The holiday is over.

You think I’m joking about this….you don’t take this seriously, and you bury your head in the sand – I won’t be very happy.

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Thousands of visitors per day and I don’t get a single comment / opinion / view on the recent “Trump and the U.S Dollar” post. Not a single one. All the while dorks with nothing better to do, actually take the time to comment / call me out – insinuating that I’m NOT in Cabo ( actually now at the all inclusive Barcelo in San Jose Del Cabo ) and that for whatever reason…..I’m lying about it. Again you gotta love it.

American Gorilla

Every red blooded American has a view on Trump ( good or bad ) as I see them here…flocking to the televisions like bands of hypno-rats…arguing about the colour of his tie and wether or not Melania has fake breasts. Deep man. Deep.

I find it absolutely fascinating that people who likely consider themselves pretty damn smart, have absolutely no clue how the value of the world’s most widely held / reserve currency might affect their investments / lives / future. No clue.

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Gold is up another 15 Dollars overnight so……one can only assume you’ve missed that train.

Like I’ve always said….I’d much rather be early than late, as chasing trades can make your head spin.

The future is looking very bright for gold as “global uncertainty” escalates and “global appetite for risk” wanes. Unfortunately you just can’t have it both ways…unless of course you decide to pick up gold as a hedge ( meaning you purchase an asset that is set to move higher while holding on to assets moving lower ) and hang on to those dividend payers during the long and arduous drawdown coming soon to a theatre near you. I did this once.

I will never do it again.

Kong Is Golden

As a relatively young trader / investor type…I can’t bear the thought of having my money tied up so tight I can’t breathe. Can’t move. Can’t sleep or eat just watching the value of my assets going down, down, down, down further….then down some more. I think we all know this feeling to a certain degree. It can certainly make sense for people a tad older than I as moving theses assets around / pulling apart portfolios and rebuilding again is a bit of a pain but….at least in my view – nothing compared to 3 straight down days -300 on Dow……trapped like a rat, then contemplation of either selling at a loss or holding on for an even larger loss.

Fear and greed baby…..that’s all there is too it. Ride that train in either direction…just don’t miss your stop.

All current trades looking golden. EUR right on. USD falling. Gold on the move.

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Canada has recently released it’s plan to formally legalize the sale of Marijuana. The Marijuana related stocks have already taken off, but there are literally “opportunities abound” here in coming months. I strongly recommend that you start doing some company research NOW as these things are set for “stellar growth” through 2017.

Canopy Growth Corp being the largest player in the sector.

Canopy_Growth_Corp_Chart

These companies ( and stocks ) are currently on fire, with the initial rush now over….providing a fantastic pullback and entry opportunity coming here soon.

Start getting a watch list together / ask me for further suggestions as these things should shoot for the moon as Canada finalizes it’s plan.

As I’ve suggested time and time again….the absolute best way to play these “potential turns” is to place your orders some 50 – 100 pips “below” current price action….or in the case of “getting long EUR/USD” some 50 – 100 pips “above”. This way…..you don’t get picked up if price moves against you ( nothing ventured nothing gained right? ) OR you do get picked up on momentum moving in your direction.

Another way to do this is to place your order “above or below” the previous days high/low ( as seen by the bottom or top of the candle of the previous day ) – keeping yourself out-of-the-way of intra day fluctuations, but still leaving you tonnes of room for profit – should price action move in your direction. The key is to get into the trade “on momentum” and not get caught in the daily volatility.

You can’t pick an exact price. You never can. No blog, no investment consultant, no snake oil salesman can call it that close – it’s impossible when you consider we are talking about moves in a currency as small as 1/100 of a cent!

As well…..if you are looking for further confirmation / theory that perhaps things are ready to turn lower….take a look at Apple ( AAPL )

If the entire planet is so “hell-bent on buying U.S Equities” – How come industry leaders like Apple look like shit?

This market has now taken out some pretty serious support, but now is essentially “too over sold to short”.

With the election looming – it would not be advised to make any large scale trades/investments or decisions as……no one wins come November 8th.

Gold miners bought weeks ago looking great as “king dollar” takes the expected pounding. No rate hike and two nut bars looking to take over the country. How could you possibly consider a “bullish” angle – short of a “pop” and then “ominous drop”?

I’m adding short USD and holding my Gold…..now eyeing “short Canadian housing” as the next big win. Currently researching the best way to hit it.

As the “value” of The U.S dollar rises – Gold price goes down. When the value of USD falls….one would expect the inverse in gold. Gold moves higher as USD falls. All good?

So you should find it interesting then, that over the past few days ( since giving the green light to buy gold ) The U.S Dollar has remained strong. Suggesting to myself at least…..that “even with a relatively strong dollar” the price of gold and silver related stocks have not only remained buoyant, but have made some pretty sold gains over the past few days.

I bought IMG at 4.68 a couple days ago – Now sitting at 5.29 – All the while USD has continued to move higher.

So what gives Kong? How can the value of the U.S Dollar keep rising AS WELL as Gold and related names?

Answer: An intermediate bottom in Gold.

I’m not talking about a nice little dip to buy, or a quick little stock tip to make you a couple extra bucks for beer….I’m talking about a large scale “fundamental shift in money flow” where the big boys are already well in position. Fully prepared for the U.S Dollar to fall – just that couple of steps ahead of you as…….you still see relative strength in USD even while the big money keeps scooping up Gold.

These large-scale “intermediate turns” don’t play out in a single day.

This will be short-lived, and here is why:

The Euro only further confirms the move currently in play as……it’s now very VERY close to bottoming as well.

Currencies don’t lie. You can’t have EUR and USD going up at the same time!

eur_bottoming_at_1-09

So the trade at hand is as follows. Long Gold / Silver and the miners NOW…….and short USD ( long EUR ) here in coming days…once this turn shows itself to the masses.

These “big turns” take weeks and even months for the big boys to build positions, so you don’t always see typical correlations playing out “minute to minute”. It’s my firm belief that the entire year of 2016 has essentially had the big money distributing stock to retail investors….while they quietly and patiently unload USD and scoop up Gold.

Make no mistake. It’s “Dollar Short Time” again here soon, with large gains planned in EUR longs, and a solid investment in Gold.

You think it’s backwards. You don’t think it makes sense but…….haven’t you been reading / lurking here long enough to know better by now? Once you throw currencies into your watch lists, and basket of tools to draw from…you can see things much clearer.

In a general sense……you can’t do shit when markets continue to trade sideways.

It’s very difficult for new traders as……you still feel that you “must keep trading” in order to keep money coming in. Trades go nowhere, you get frustrated…..then you make mistakes. Costly mistakes.

Taking a quick look at the Dow ( going back a few months ) we can see at least the past 8 weeks as virtually “unchanged”. Marketing stuck in the mud a full 8 weeks now.

dow_trading_sideways_for_months

You can’t “really” trade this, as this small amount of movement leaves little room for profit – and timing entries becomes paramount. You need to recognize it for what it is….and accept it. Then your trades / trading will improve.

I don’t really expect this to change until AFTER the U.S Election / Gong Show finally winds up in November, and will be planning trades accordingly. Smaller orders…lower expectation. More planning for the larger moves expected post elections.

FOREX KONG’S DISCLAIMER

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial adviser if you have any doubts.